Author Topic: new to investing in LC  (Read 4491 times)

AnilG

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Re: new to investing in LC
« Reply #15 on: October 27, 2016, 05:35:12 AM »
Agree with Fred, there is very little benefit from diversifying across Grades as grades are just ordered sets across risk-return spectrum. Just select specific grades based on your risk appetite. Diversification helps when you select two dissimilar criteria that has potential to offset risk/behave differently from each other. For example, you may benefit from diversifying borrowers across different states so that economic condition of any one state doesn't have outsized influenced on your portfolio performance. Similarly diversifying across home ownership, employment length, and credit age can be more beneficial.

Thanks...I am up to 57 notes and will be buying some more tomorrow. My current portfolio is this mix: A (7.1%) B (22.9%) C (32.9%)
D (35.7%) E (0.0%) F (1.4%) G (0.0%)
 What or where can I strengthen...I am thinking A and B Grade.

There is no need to spread yourself across the grades.  Decide where in the risk spectrum you want to invest, and concentrate there.
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Anil Gupta
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SLCPaladin

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Re: new to investing in LC
« Reply #16 on: October 27, 2016, 10:37:53 AM »
Agree with Fred, there is very little benefit from diversifying across Grades as grades are just ordered sets across risk-return spectrum. Just select specific grades based on your risk appetite. Diversification helps when you select two dissimilar criteria that has potential to offset risk/behave differently from each other. For example, you may benefit from diversifying borrowers across different states so that economic condition of any one state doesn't have outsized influenced on your portfolio performance. Similarly diversifying across home ownership, employment length, and credit age can be more beneficial.

I still chuckle when I think of whoever it was on this forum who suggested one way to diversify against platform risk of LC was to take out a personal loan oneself.